AIG 2014 Annual Report Download - page 299

ITEM 8 / NOTE 14. VARIABLE LIFE AND ANNUITY CONTRACTS
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GMDB and GMIB
Depending on the contract, the GMDB feature may provide a death benefit of either (a) total deposits made to the contract less
any partial withdrawals plus a minimum return (and in rare instances, no minimum return) or (b) the highest contract value
attained, typically on any anniversary date minus any subsequent withdrawals following the contract anniversary. GMIB
guarantees a minimum level of periodic income payments upon annuitization. GMDB is our most widely offered benefit; our
contracts also include GMIB to a lesser extent.
The liabilities for GMDB and GMIB, which are recorded in Future policyholder benefits, represent the expected value of
benefits in excess of the projected account value, with the excess recognized ratably over the accumulation period based on
total expected assessments, through Policyholder benefits and losses incurred. The net amount at risk for GMDB represents
the amount of benefits in excess of account value if death claims were filed on all contracts on the balance sheet date.
The following table presents details concerning our GMDB exposures, by benefit type:
At December 31, 2014 2013
Net Deposits Net Deposits
Plus a Minimum Highest Contract Plus a Minimum Highest Contract
(dollars in billions) Return Value Attained Return Value Attained
Account value $85 $17 $ 78 $15
Net amount at risk 1 1 1 1
Average attained age of contract holders by product 62 68 66 70
Range of guaranteed minimum return rates 0%-5% 0-5%
The following summarizes GMDB and GMIB liabilities related to variable annuity contracts:
Years Ended December 31,
(in millions) 2014 2013 2012
Balance, beginning of year $394 $ 413 $ 445
Reserve increase 93 32 43
Benefits paid (67) (51) (75)
Balance, end of year $420 $ 394 $ 413
We regularly evaluate estimates used to determine the GMDB liability and adjust the additional liability balance, with a related
charge or credit to Policyholder benefits and losses incurred, if actual experience or other evidence suggests that earlier
assumptions should be revised.
The following assumptions and methodology were used to determine the GMDB liability at December 31, 2014:
• Data used was up to 1,000 stochastically generated investment performance scenarios.
• Mean investment performance assumption was 8.5 percent.
• Volatility assumption was 16 percent.
• For certain products, mortality was assumed to be 85 percent of the 1983 variable annuity minimum guaranteed death
benefit table, adjusted for recent experience. For other products, mortality was assumed to be 92 percent to 139 percent of
the 2012 individual annuity mortality table. 
• Lapse rates vary by contract type and duration and ranged zero percent to 37 percent.
• The discount rate ranged from 3.75 percent to 10 percent and is based on the growth rate assumption for the underlying
contracts in effect at the time of policy issuance.
GMWB and GMAV
Certain of our variable annuity contracts contain optional GMWB benefits and, to a lesser extent, GMAV benefits, which are not
currently offered. With a GMWB, the contract holder can monetize the excess of the guaranteed amount over the account